This information is reproduced courtesy of Demos
Challenges to old business models
Some of the tension in writing this pamphlet has not only been describing an industry that is changing very quickly, but also in the historic division between two models of recruitment.
Two models of recruitment
One of these models has been the extremely personalised, high-level recruitment practices used to fill highly skilled, highly paid jobs. And the second approach has been an industrial model used to fill low skilled vacancies - in which big companies, employing lots of people, offered a large number of relatively standardised jobs. In the first of these models value was created in relationships - between clients and recruitment companies; between candidates and companies; in peer-to-peer networks that recruitment companies made use of. In the second model, value was created in institutions by employees of recruitment companies matching candidates with vacancies, using powerful databases.
With the advent of the internet large parts of the recruitment industry shifted online - driven by the economics and speed of the internet. Jobs sites - like Monster, Fish4Jobs and Totaljobs - took over many agency and advertiser functions, doing traditional tasks quicker, cheaper and with more transparency. But the internet remained a tool for one-way transmission - offering employers a new space to advertise their jobs and identify candidates, not a fundamentally new way to approach their roles.
However, this continuity is already being challenged: the gap between the two models is being challenges by two sets of factors:
New expectations
Chapters 1-5 of this pamphlet describe the way in recruitment companies are having to contend with new expectations from a number of angles. The drive for talent has pushed companies to think about what they need, rather than what they need right now. Identifying, attracting, employing and developing the right people are key parts of the recruitment process in the world's most successful companies - this is the war for talent.
This war marks part of a bigger shift in company focus - an emphasis on value rather than cost. Driven by efficiency, companies are seeking new ways of generating value. One of these, identified by a number of top companies, is taking the recruitment process back in-house focusing on long-term strategic investment in people, rather than quick-fix solutions.
Brand is increasingly tied up with business identity and perceptions of success, driving organisations to reflect on their image in the marketplace. People - often the external face of an organisation - have taken on greater significance, as employers recognise their ability to determine market perception.
Reflecting on this, employers are placing more value on who they recruit, and how that person fits the brand and culture of the organisation. In an increasingly competitive environment, brand differentiation among competitors is imperative. This has a direct impact on the recruitment process, as organisations move towards recruiting on the basis of behaviours, rather than certified competencies alone. These behaviours, identified and prioritised by an organisation, indicate that candidates do things ‘the company way'. They demonstrate synergy with company values and brand, as well as straightforward ability to get the job done.
Personal ethics and values are increasingly bound up with people's choice of job and employer. Priorities and expectations of work have shifted - employees want company ethos to reflect their own values set, and cite corporate social responsibility as a key part of the employer selection process. The boundaries between the personal and the professional have also undergone a significant shift. Now, the terms and conditions of a ‘good job' go well beyond pay - companionship, fulfilment and quality of life have become basic employee expectations of work.
These changes indicate a shift in the relationship between employee and employer - from a traditional contract based on capital in exchange for labour, to an accord between two parties reflecting the needs and aspirations of both.
New opportunities
Web 2.0 has opened recruitment up - two-way information flows, social networking, peer-to-peer, feedback and transparency - and invited employers and employees to engage with one another on a new platform.
In the knowledge economy information is power. Web 2.0 collects this power and allows it to be reviewed, shared, altered, discussed and responded to in an open space. But too much information leads to confusion and apathy. Powerful technologies - using material generated by Web 2.0 - create personalised responses to individual needs. Using search engines, scrapers and aggregators, Web 2.0 gives employees and employers exactly what they want, filtering out junk and responding to an identified and articulated need.
This information is increasingly used to develop relationships - primarily between employer and candidate - which may lead to a job.
But peer-to-peer is where Web 2.0 is adding real value. Bringing individuals together - to exchange knowledge or recommendations - challenges traditional professionalism, and shifts the balance of power in favour of the individual.
These changes, combined with the transparency inherent to the internet and the feedback mechanisms exclusive to Web 2.0, encourage individuals to evaluate employers, and invites employers to view the personal and professional histories of a potential employee - the deeper challenges associated with this trend will be addressed in the next chapter.
Technology also breeds opportunities for much greater accountability in advertising - with the advent of payment per click shifting the emphasis of much advertising away from speculative (if still strategic) advertising, to data-rich, accountable spending on the part of companies - where payment happens by results.
The increasingly complex relationship between employers and employees - reflected in the changing demands described above - also creates opportunities for recruitment companies to consider how else they can add value not just as suppliers of specific services, but also as intermediaries in labour markets. In a world where brand and reputation are becoming increasingly important, the ability to help companies learn about how they are perceived in the labour market - and how attractive their offer is to potential candidates - becomes more and more valuable.
Beyond the industrial model
The changes brought about by these new expectations and new opportunities are closing the gap between the two models described above. Many of the approaches traditionally applied in high-level recruitment are filtering through to lower skilled jobs as employers and individuals become more sophisticated in their decision-making and new business models make that affordable.
In general terms this suggests a move away from standardisation towards a model which values distinctiveness and individuality. Value is created by users - employers and employees - and networks replace databases as the central source of information. Openness and transparency - core principles of the new model - breed accountability, allowing employers and employees to hold one another to account. Service providers too - agencies and advertisers - are accountable, as efficiency demands tight evaluation procedures and ongoing feedback. Technology is vital to the new model, as personalised, targeted services replace the one-size-fits-all approach of the past. Talent, rather than availability, is the driver of the model putting the individual - their experience, aspirations and expectations - at the very centre of the process.
The following section makes a series of recommendations, based
on the principles of the business model outlined above.
Ensure that commissioning processes focus on value rather than cost
Efficiency and accountability are at the centre of the new business model. In a world where organisations want to know not just what service they are buying, but what value a third party organisation can provide, finding ways to demonstrate genuine impact is paramount.
Track retention and demonstrate impact
Tracking the origin of staff - via agency, employee referral or online recruitment campaign - and monitoring their levels of retention is becoming more common. Slowly, organisations are recognising the value of monitoring behaviours and experiences, particularly during an employee's first year. Mapping the employee journeys allows companies to match experience with outcome, establishing what helped to engage the best people, and what failed. Recruitment agencies and employers themselves ought to adapt their evaluation processes in response to this challenge. Inviting clients to evaluate them based on certain criteria would allow agencies to lead on change in this area.
Demand accountable advertising online to demonstrate impact
In the same way in which third party recruitment looks set to be affected by the drive for leanness, accountability and efficiency, so too does advertising on the web. Traffic to websites and online behaviour are increasingly easy to track. Pay-per-click (PPC) advertising allows companies to direct job seekers to their website via a standard search.
Once there companies can evaluate how people behave - using the information to inform future design and process. This technology has the potential to change the market completely - in future, companies might pay advertisers only on the basis of responses they receive to an ad, or on how many candidates get through their screening process.
Ultimately, they may hand over a fee only once a job is filled.
Advertisers must stay ahead of the trend here, working out innovative ways to remain competitive, despite tighter accountability structures.
Help organisations learn about themselves by overcoming the insider/outsider problem
In a world in which ethos, ethics, branding and reputation are becoming more important than ever in recruiting and retaining staff, recruitment companies - as intermediaries between employers and the labour market - can become the eyes and ears of their clients.
Organisations suffer when they develop an insider/outsider problem: when the way they see themselves and the way the rest of the world sees them are incompatible. An organisation may believe that it is living - and communicating - its values when, in fact, its reputation in the labour market and wider society suggests that it is being far less successful in this respect.
The opportunity for recruitment companies is that they are in an ideal position not just to find and place candidates - but to help organisations learn about themselves and how they are perceived.
Delivering high-quality candidates will remain a non-negotiable, but becoming a resource for feedback and learning offers a new opportunity for recruiters to create value for clients.
Align human resources, public relations and marketing and be clear on core organisational values
Rapid and regular information exchange among users online means - despite impressive advertising campaigns - organisations have less control over their brand. Having a core set of values, which reflect the brand but are lived by the company and its employees, may be a more powerful way of telling an effective story about an organisation and what it stands for.
Telling this story means joining up functions in-house. HR, PR and Marketing - with overlapping responsibilities in respect of brand - should align their strategies in order to convey brand values more effectively.
Align the recruitment experience with client ethos
At a time when job seekers are showing an increasing interest not just in levels of pay but also in a much wider set of factors - including how it feels to work somewhere - the experience of being recruited matters.
Organisations with a relaxed, business-like or playful ethos (and brand) need to ensure that the process of recruitment itself reflects that ethos. When candidates go through recruitment processes they are also gathering information and making judgements about their potential employers - meaning that the process must reflect the organisation itself. This requires differentiated processes designed not just to identify the right competencies but also to create the right impression.
Find ways to connect with the passive job seeker
For years the bulk of recruitment has dealt with people actively looking for a job. People have joined agencies - and those agencies have helped people find jobs. The market for active job seekers will always be important and valuable, but connecting with the passive job seeker represents an entirely new set of opportunities.
The business models described in chapter 5 can be understood as the efforts of the early adopters in of this approach. Organisations like Zubka, LinkedIn and Simply Hired work through the power and reach of the network, rather than the sum of the knowledge within an organisation. Personal referrals not only tap into the rich knowledge that we all have of our peers and acquaintances, but also provide ways for organisations to reach them when they may not be actively looking for a job. This potentially expands an organisation's reach and knowledge - and talent pool - enormously.
Future recruiters and businesses will identify the passive job seeker long before he or she applies for a job. They will track his interest and maintain a light-touch relationship, keeping him up to date on company news. Their sensitive search engine will match her to jobs as they come up, and let her know they're interested in her application.
When he is ready for a change he will log his interest with them and they will respond. This is more than a quick transaction, it is a relationship built up over time, based on mutual interest and understanding. To maximise their talent pool HR departments and recruitment agencies should use technology to connect with passive job seekers in this way.
Broker and utilise peer-to-peer relationships
Slowly organisations across sectors are beginning to identify the value that lies in peer-to-peer relationships. Online ‘communities' are an obvious example of this, while offline experiments with peer support, mentoring and social events are key ways for large organisations to add value. Beyond simply drawing on these relationships, however, there is an opportunity for recruitment organisations to help connect people to one another.
Use Web 2.0 to build personalised relationships online
A central feature of Web 2.0 is the opportunity to develop online relationships with - and services to - individuals that become more personalised over time. Log on to Amazon.com and you will be advised which other books you might like to read, on the basis of the choices made by others or previous choices made by you. Explore the site further and you can adjust your profile to make this advice more accurate and useful in the future. Log on to Pandora.com and you can create your own personalised radio station - building up a profile by rating songs that the site suggests you should listen to.
These features are transferable to recruitment. Users should be able to actively shape their own profiles and relationships online - allowing content to come to them without having to contend with endless spam. Building these feedback mechanisms into online activity and alerting people to the choices made by others hold the potential of far more personalised relationships to be built up over time at minimal cost.
Tap into the long tail
The rise of advertising online raises some interesting challenges and opportunities for the industry. On the one hand advertising online brings in less money per advert for those selling advertising space, but the internet offers unlimited space - and is more affordable to a greater number of organisations.
While the cost per advert may therefore be less online, there may well also be many more adverts placed in total - opening up the opportunity for many more ‘niche' adverts to be placed in the future.
This is what Chris Anderson, the editor of Wired Magazine, has described as the long tail. He argues that the web offers the opportunity to go beyond the ‘tyranny of the big hit', noting that
Google makes most of its money from small advertisers rather than blockbuster advertising placements by one company at any one time. As Kevin Laws, an American venture capitalist, argues, ‘The biggest money is in the smallest sales.'74 Anderson argues that the long tail relies on more than just space and economics, however. He offers three key principles:
Rule 1: Make everything available.
Rule 2: Cut the price in half. Now lower it.
Rule 3: Help me find it.
The third of these principles is vital: ‘everything available' can easily become ‘information overload' without ways of aggregating information, directing people and filtering out unwanted information. This points towards the importance of many of the tools of Web 2.0 - and of recruitment agencies as intermediaries - in helping people navigate the long tail.
